Western Digital Stock Has Quadrupled in 2025, but Analysts Still Think It is a Buy for 2026

Core Viewpoint - Western Digital (WDC) stock has experienced a significant rally of nearly 180% this year, driven by strong industry trends, robust revenue growth, and a positive outlook for the future [1] Group 1: Company Performance - Western Digital reported a revenue growth of 27% year-on-year for Q1 2026, amounting to $2.82 billion, primarily fueled by the growth in cloud data storage [5] - The company expects gross margins for Q2 2026 to be in the range of 44% to 45%, indicating healthy profitability [4] - Operating cash flow for Q1 2026 was reported at $672 million, with free cash flow at $599 million, suggesting an annualized free cash flow potential of $2.4 billion [6] Group 2: Market Trends and Outlook - The global data generation is projected to triple to 527.5 zettabytes between 2024 and 2029, creating a substantial addressable market for Western Digital's HDDs [3] - The semiconductor revenue is expected to exceed $1 trillion by 2026, driven by AI's impact on memory, storage, and networking, which supports the sustained uptrend in WDC stock [2] - Demand for HDDs is anticipated to remain high, bolstered by data center requirements and the adoption of higher-capacity drives [7]